Topping the World Bank’s Ease of Doing Business rankings for the fourth year running, New Zealand saw more greenfield projects from January to September than in the whole of 2019. And, despite the pandemic, foreign direct investment (FDI) is likely to remain strong, countering the global trend.
“New Zealand has been built off the back of FDI,’ says Peter Chrisp, chief executive of New Zealand Trade and Enterprise, in a recent interview by fDi Intelligence. ‘We know there are plenty of opportunities for investors and they are very welcome here.’”
Generally, FDI takes place when an investor establishes business operations or acquires business assets in a foreign company. Unlike portfolio investments, FDI is often a ‘hands-on’ process involving more than just capital investment, and is one that the government continues to encourage.
In 2016, the New Zealand government established a global strategy to promote more international investment. The objectives were to attract FDI with higher added value, to encourage multinational companies to set up their research and development in the country, and to convince private investors and other entrepreneurs to reside in the country.
For New Zealand, Peter Chrisp sees three dimensions of the country’s ecosystem that are instrumental in increasing FDI.
"First, the simplicity of the regulatory and tax environment. Second, the huge drive to simplify business and registration systems. But the most powerful aspect is the mindset and integrity of the people. We are the least corrupt country in the world."
Labour’s decisive victory in the October election is also a positive for investors. ‘It shows we have a healthy, diverse, stable democracy,’ Chrisp says.
Further benefits New Zealand has to offer are an efficient and market-oriented economy, a stable and secure environment with modern infrastructure in transport and telecommunications, and a highly trained, flexible and versatile workforce. Numerous free trade agreements and a close proximity to Asian markets are also advantages, and we have one of the lowest customs tariff rates in the world.
The government’s strategy to facilitate foreign investors’ access to the domestic market has included redesigning the visa system for investors – you can read the latest information on the NZ Immigration website. And there is an R&D Tax Incentive (RDTI) to help a wide range of eligible businesses undertake more research and development.
Altogether, these strategies are proving successful, despite COVID-19 restrictions. ‘This has been the busiest, most intense period in my 10 years in this role,’ says Chrisp. But challenges remain. ‘The opportunities are still there, but greenfield investors like to meet teams and see assets in person. The current border closure means they have to go via intermediaries, which slows things down.’
For foreign direct investors, there are a range of opportunities across sectors that include forestry, infrastructure and housing developments, and the highly innovative tech sector, which is the country’s fastest-growing. And the government’s enthusiasm for FDI means investors can expect an ease of doing business not found in other markets, aided by people committed to that cause. Says Chrisp, ‘I care an enormous amount about the mandate to grow New Zealand internationally.’
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Contact investment specialist Andrew Carpenter to learn more about investing in Auckland, New Zealand
This article provides general information on potential investment opportunities in Auckland and is not intended to be used as a substitute for financial advice. The views and opinions expressed are those of the relevant author, and do not necessarily reflect the views of Auckland Tourism Events and Economic Development. Auckland Tourism Events and Economic Development disclaims all liability in connection with any action that may be taken in reliance on this article, and for any error, deficiency, flaw or omission contained in it.